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HomeMy WebLinkAboutResolution No. 93-C09411 RESOLUTION NO. 93-C94 • A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING THE FORM OF INDEMNITY AGREEMENT AND AUTHORIZING THE COMPLETION OF NEGOTIATIONS PERTAINING TO THE INDEMNITY AGREEMENT AND THE EXECUTION OF THE SAME WHEREAS, the City of Azusa (the "City") is in the process of acquiring Azusa Valley water Company, a business corporation ("AVWC"); WHEREAS, the Articles of Incorporation of AVWC and of its subsidiary, Canyon water and Development Corporation, a business corporation ("Canyon"), provide for the indemnification of directors, officers, employees and agents; WHEREAS, as partial consideration in connection with the acquisition of AVWC, the City has agreed to continue and maintain for a period of three years from the closing of the acquisition AVWC's current policy of directors' and officers' liability insurance or a generally comparable policy providing coverage with respect to matters occurring prior to the closing; WHEREAS, the City and AVWC and Canyon have agreed that the City will indemnify and hold harmless all directors and officers of AvwC and Canyon in lieu of continuing the directors' and officers' liability coverage referred to above; NOW, THEREFORE, the City Council of the City of Azusa, California, does hereby resolve, determine and order: Section 1. Approval of Indemnity Agreement RESOLVED, that the form of the draft Indemnity Agreement (the "Indemnity Agreement") between the City of Azusa and each of the directors and officers of AVWC and Canyon, attached hereto as Exhibit "A", and the transactions contemplated thereby, be and hereby are approved; that any and all proper officers of the City be and hereby are authorized and empowered to complete negotiations with respect to the Indemnity Agreement and the transactions contemplated thereby; and any and all proper officers of the City, and any of them, be and hereby are authorized and empowered to execute the Indemnity Agreement in definitive form, for, or on behalf, and in the name of the City with such changes therein as the officer executing the same shall approve, his or her approval to be conclusively evidenced by his or her execution thereof. RESOLVED FURTHER, that any proper officer of the City be and hereby is authorized and directed to effect delivery of f:\WP51\AZWATEN\"ISC\AZUSA.953 0 0 the consideration provided for in the Indemnity Agreement, in accordance with its terms and conditions. RESOLVED FURTHER, that any and all proper officers of the City, and each of them, be and hereby are authorized, empowered and directed to execute any and all documents, instruments or papers and to take any or all steps or actions which may be necessary or appropriate to carry out the interest of the foregoing resolutions and the transactions contemplated thereby. Section 2. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Azusa, held this 19th day of July, 1993, on the following vote: /if././,1114 � Euci ne F. Moses, MAYOR I HEREBY CERTIFY the foregoing Resolution was duly adopted by the City Council of the City of Azusa, at a regular meeting thereof held on the 19th day of July, 1993. AYES: COUNCILMEMBERS: MADRID, NARANJO, ALEXANDER, :. MOSES NOES: COUNCILMEMBERS NONE ABSENT: COUNCILMEMBERS: DANGLEIS r /edoZlpvh A. olis, C CL FAWP51\AZYATER\MISC\AZUSA.953 SENT BY:1 7-15-93 : 5:14PM ;FULBRIGHT & JAWORSKI-4 121a8896605;# 4 lNDENMTY AGREEMENT THIS AGREEMENT is made as of the 27th day of July,1993, between The City of Azusa ("City") and ("Indemnified Party"), WHEREAS, Indemnified Party has served as a member of the Board of Directors and/or as an employee, officer or agent of Azusa Valley Water Company, a California corporation ("AVWC"), or of its wholly owned subsidiary, Canyon Water and Development Corporation ("Canyon'), at the request of AVWC in order to pursue AVWC's interests (AVWC and Canyon are hereinafter individually and collectively referred to as the "Corporation"), and in such capacity or capacities has performed a valuable service for the Corporation; and WHEREAS, Article SEVEN of the Articles of Incorporation of AVWC, Section 16 of the Bylaws (the "Bylaws") of AVWC, Article V of the Articles of Incorporation of Canyon, Section VI of the Bylaws of Canyon and Section 317 of the California Corporations Code, as amended (the "State Statute") provide for the Indemnification of directors, officers, employees and agents; WHEREAS, as partial consideration in connection with the acquisition of AVWC by City, acting through Azusa Public Improvement Corporation ("APIC") and Azusa Public Financing Authority ("APFA"), City, APIC and APFA had agreed to continue and maintain for a period of three years from the closing of that acquisition AVWC'e current policy of directors' and officers' liability insurance or a generally comparable policy providing coverage with respect to matters occurring prior to the closing (the "Closing') of the tender offer ("Tender Offer") contemplated by that Agreement Re Tender Offer among APIC, APFA, City and AVWC dated as of April 15, 11993 (the "Tender Offer Agreement'); WHEREAS, City and the Corporation have agreed that City will indemnify and hold harmless all directors and officers of the Corporation at the time of the Closing of the Tender Offer in lieu of continuing the directors' and officers' liability insurance coverage referred to above; WHEREAS, AVWC has previously represented to City that it is not aware of pending or threatened Proceedings against any of its officers or directors and Indemnified Party is not aware of any such pending or threatened Proceeding against him that exists at the date hereof; and WHEREAS, in reliance on the agreement set forth herein the policy of directors' and officers' liability insurance maintained by AVWC will be terminated as of the Closing, NUOVARSSM16201MA - 1 - EXHIBIT "A" SENT SY:1 1-15-93 ; 5:15PM ;FULBRIGHT & JAWO RSKI4 12138896605;# 5 NOW, THEREFORE, in consideration of Indemnified Party's past service as a director and/or officer of the Corporation, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: "Litigation Costs" means costs, chargee and expenses, including, without limitation, bonds, expenses of investigation, fees of experts, travel, lodging, attorneys' fees and expenses, reasonably incurred in the investigation, defense or prosecution of or other involvement in any Proceeding and any appeal therefrom, and all coats of appeal, attachment and similar bonds. "Losses" means the total amount which Indemnified Party becomes legally obligated to pay in connection with any Proceeding, including, without limitation, judgments, damages, penalties, fines, court or investigative costs, amounts paid in settlement, amounts lost or ordered forfeited pursuant to injunctive sanctions, and all Litigation Costs. "Proceeding" means any threatened, pending or completed claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative (whether external or internal to the Corporation, including, without limitation, an action by or in the right of the Corporation), and whether formal or informal. 2. Indemnity of Indemnifled Part�q. City hereby agrees to indemnify and hold harmless Indemnified Party to the full extent that the Corporation is authorized or permitted by the Articles and Bylaws of AVWC and Canyon, as the case may be, or by California law as in effect on the date hereof and to such greater extent as the same may hereafter from time to time permit from and against any Proceeding and Losses of any nature whatsoever, arising out of or relating to the acquisition of AVWC by APIC (including, without limitation, the merger contemplated by the Tender Offer Agreement), the operation, the management or assets of the Corporation through the Closing of the Tender Offer. 8. Additional Indemnity. Subject only to the exclusions set forth in Section 4 hereof, in addition to and not in substitution for or diminution of the obligations of indemnification set forth in Section 2 hereof, City hereby further agrees to indemnify Indemnified Party against any Proceeding or Losses incurred by Indemnified Party in connection with any Proceeding to which Indemnified Party at any time becomes a party, or is threatened to be made a party or otherwise becomes involved, by reason of the fact that Indemnified Party is or was a director, officer, employee or agent of the Corporation. 4. Limitations on AdditignAl TndgMn4. No amounts of indemnity pursuant to Section 3 hereof shall be paid by City: saoms IMM7N1e,ens - 2 - SENT BY;1 : 7-15-93 ; 5;15PM ;FULBRIGHT & JAWORSKI- 1213BB96605;# 6 (a) on account of any Proceeding in which a final, non -appealable judgment is rendered against an Indemnified Party for an accounting of profits made from the purchase or sale by Indemnified Party of securities of the Corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended; and (b) on account of Indemnified Party's conduct which is finally adjudged in any Proceeding to have (i) been knowingly fraudulent or, (if) with respect to any criminal proceeding, arisen out of conduct of the Indemnified Party that the Indemnified Party believed or had reasonable cause to believe was unlawful. b. Continuation of n emnity. All agreements and obligations of City contained herein shall continue so long as Indemnified Party shall be subject to any possible Losses in any then threatened or pending Proceeding by reason of his having served as a director or an officer of the Corporation. 6. Notification and Defense of Claim. Promptly after receipt by Indemnified Party of notice of the commencement of any Proceeding, Indemnified Party will, if a claim In respect thereof is to be made against City under this Agreement, give prompt and reasonable notice to City of the commencement thereof, but the omission so to notify City will not relieve City from any liability which it may have to Indemnified Party, unless City can demonstrate by clear and convincing evidence that it was materially prejudiced by the failure to receive such notice. With respect to any such Proceeding as to which Indemnified Party becomes involved: (a) City will be entitled to participate therein at its own expense; and (b) Except as otherwise provided below, to the extent that it may wish, City may, jointly with any other indemnifying party, assume the defense thereof, with counsel satisfactory to Indemnified Party. After notice from City to Indemnified Party of its election so to assume the defense thereof, City will be liable to Indemnified Party under this Agreement for all Litigation Costs (other than, except as provided below, attorneys' fees) subsequently incurred by Indemnified Party in connection with the defense thereof. Indemnified Party shall have the right to employ personal counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from City of its assumption of the defense thereof shall be at the expense of Indemnified Party, unless (i) the employment of counsel by Indemnified Party has been authorized by City, (if) Indemnified Party shall have reasonably concluded that there may be a conflict of interest between City and Indemnified Party in the conduct of the defense of such action, or (fif) City shall not In fact have employed counsel to assume the defense of such action, In each of which cases the fees and expenses of counsel for the Indemnified Party shall be at the expense of City. City shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the IWOO9Sg10M101O1a".9 - 3 SENT BY:10 : 7-15-93 : 5:17PM :FULBRIOHT &� ORSKI-4 12138896605:# 7 Corporation or as to which Indemnified Party shall have made the conclusion provided for in (if) above; and (c) City shall not be liable to indemnify Indemnified Party under this Agreement for any Losses paid in settlement of any Proceeding or claim effected without its written consent. City shall not settle any Proceeding or claim in any manner which would impose any penalty or Iimitation on Indemnified Party without Indemnified Party's written consent. Neither City nor Indemnified Party will unreasonably withhold their consent to any Proposed settlement. 7. XADd&tQjy Advancement of Expenses. At the request of Indemnified Party, Litigation Costa incurred or contracted for by him in any Proceeding shall be paid by City on a continuing and current basis, in advance of the final disposition of such matter with the undertaking which Indemnified Party makes hereby that if it shall be ultimately determined that Indemnified Party was not entitled to be indemnified or was not entitled to be fully indemnified, Indemnified Party shall repay to City the amount, or appropriate portion thereof, so advanced. Such advancement and current payment of Litigation Costs by City shall be made promptly (but in any event within 30 days) after receipt by City of Indemnified Party's request therefor. S. ReDa=ent of Expenses. Indemnified Party agrees that Indemnified Party will reimburse City for all Litigation Costs paid by City in connection with any Proceeding in which Indemnified Party is involved in the event and only to the extent that it shall be ultimately determined that Indemnified Party is not entitled to be Indemnified by City for such Litigation Costs under the provisions of this Agreement. (a) Indemnification hereunder shall be made promptly, and in any event within 60 days of Indemnified Party's written request therefor, unless a determination is made reasonably and within such 60 -day period by City in the manner provided in subsection (b) below, that Indemnified Party is not entitled to indemnification hereunder because of the limitations thereon set forth in Section 4 hereof. (b) The determination to be made by City under subsection (a) above shall be based on the facts known at the time and shall be made by the Mayor, the City Council or such governing body or individual with authority to make such decisions, as required by law, If by the City Council or other body, approval must be by a majority vote of a quorum consisting of members who are not parties to the Proceeding ("disinterested members"). If such a quorum is not obtainable, by a committee of such Council or body consisting solely of two or more disinterested members or by independent legal counsel in a written opinion. Even if such a quorum is obtainable, the determination may be made by independent legal counsel in a written opinion. BWOXK"=/#1O1U7.2 .4- -SENT BY:1 • 7-15-93 ; 5:18PM ;FULBRIGHT & JAORSKI4 121388966059 8 (a) If Indemnified Party is required to bring any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, City shall reimburse Indemnified Party, on a continuing and current basis, for all of Indemnified Party's reasonable fees and expenses in bringing and pursuing such action. (b) The right to indemnification hereunder shall be enforceable by Indemnified Party in any court of competent jurisdiction if Indemnified Party's claim therefor is improperly denied, in whole or in part, in the manner provided herein, or if no disposition of such claim In made within 60 days from the receipt by City of the indemnified party's request for indemnification hereunder. (i) Indemnified Party agrees to do all things reasonably requested by the City Attorney, the City Council or the Mayor of City, or such other person as City may direct to enable City to coordinate Indemnified Party's defense with, if applicable, City' defense, provided, however, that Indemnified Party shall not be required to take any action that would in any way prejudice his defense or waive any defense or position available to him or her in connection with any Proceeding-, and (ii) Indemnified Party agrees to cooperate with City and its counsel and maintain any confidences revealed to him by City in connection with City's defense of any Proceeding. City agrees to cooperate with Indemnified Party and his counsel and maintain any confidences revealed to it by Indemnified Party in connection with Indemnified Party's defense of any Proceeding. 12. 8everabil. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. 13. NIotfce. Notices required, permitted or otherwise provided for herein shall be in writing and shall be deemed to be given and effective when (f) delivered by hand or by messenger to the person named below, (ii) sent by facsimile to the telecopfer number listed below (if so listed), if such message is followed by mailing same to the recipient as herein provided within forty-eight hours of the facsimile tranemission, or (iii) mailed by registered or certified mail, return receipt requested, in a sealed envelope, postage prepaid, addressed as follows: ewo5e902an410M7.2 - 5 - SENT BY:1 • 7-15-93 : 5:18PM :FULBRIGHT &ORSKI•• 12136896605 it 9 If to City, addressed to it as follows: City of Azusa c/o Bonifacio Bonny Garcia, Esq. BARBOSA GARCIA & BARNES 500 Citadel Drive, Suite 390 Los Angeles, California 90040 or if to the Indemnified Party, addressed to it as follows: Telecopier No. or to such changed address of which City or the Indemnified Party (as applicable) shall have theretofore given five days prior notice to the other party pursuant to this Section 13. 14, Authority. City represents and warrants to Indemnified Party that it has the requisite power and authority and has taken all required municipal actions to authorize, execute and deliver this Agreement and to fulfill its obligations and duties created hereunder. 15, Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to each of the other parties hereto. 16. No Ase' ment, City shall not assign or transfer any or all of its duties and obligations hereunder to any third party without Indemnified Party's prior written consent. 17, Further Assurances, Each of the parties hereto shall execute and deliver any and all additional papers, documents, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of this Agreement. ' r r C r•. r' i a r.rr r VTMrn r: •r (a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of California. 9WO&O a9OW/V201mi .6. " "SANT BY;1 7-15-93 ; 5;19PM ;FULBRIGHT & I RSKI- 12138896505;910 (b) This Agreement shall be binding upon Indemnified Party and upon City, its successors and permitted assigns, and shall inure to the benefit of Indemnified Party, his heirs, personal representatives and assigns and to the benefit of City, its successors and permitted assigns. (c) No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. CITY OF AZUSA Com' 40—:051M11 IT1' : 14 swoee9aassuTN�ma»a -'1